Media and Advertising: Media Consolidation and the state of Entertainment

The top management gurus in today’s largest radio broadcast companies will tell you that consolidation has been great for everyone. Investors are seeing great returns, listeners have more choices than ever before with a greater diversity of formats, and communities are being served with better products. On the surface, this seems to be true.

In the old days of mom and pop ownership the rules only allowed broadcast companies to own 14 stations. There was generally a dearth of diversity in formats in most markets even the mega cities. Less profitable fringe formats like jazz, beautiful music, big band, nostalgia, and some rock formats simply did not exist in most medium markets. Yet, it wasn’t unusual for a city the size of Birmingham to have two or three adult contemporary stations all playing essentially the same music.

Collusion by philosophy

The major companies don’t collude because it is illegal. Frankly, they have such a strangle-hold on the markets within their own radio station clusters, they don’t need to collude.

Is there really a free market when the number of business licenses is limited by government regulation?

The major broadcast companies will tell you that they have plenty of competition from the internet, satellite radio, and multi-media devices such as MP3 players, cds and the like. But is this really true? If one looks you’ll see that Clear Channel owns a sizeable portion of one of the satellite companies, XM. It’s heavily investing in Univision and Hispanic radio. It’s poised to be a major player on the internet. There’s nothing wrong with that but let’s not fret about them being put out of business by internet radio.

I won’t debate whether radio content is better now than it used to be. It probably is. But big conglomerates don’t infuse creativity into anything. There was a time when a young band or singer songwriter could hook up with a small "mom and pop" record company and foster a whole new wave of music. Now, the record industry is controlled by a handful of corporate entities that do little but imitate the last thing that worked. Television and radio do the same. Innovation and new things have always come from the entrepreneurial misfits who rebelled against the system.

That’s why the record industry is fighting so hard to shut down file sharing. Not only because of their perceived loss of revenue (which I feel may be caused more by the lack of good quality music than by theft) but their attempt to harness this unruly, out of control beast – that might just sink them.

When it all shakes out, it doesn’t really matter what the FCC or congress or the courts decide. There will always be some crazy person somewhere who will launch some new incredible wave of ideas. After all, it’s not the hardware that counts – just the software!

John Jenkins is president of Edgemarketing, a multimedia promotiion and marketing company. You can visit the Edgemarketing website at Edgemarketing.com, or e-mail John at johnjenkins@edgemarketing.com.

The Value of an Outside Perspective

by Ben McWhorter

Just look around, and see how many successful businesses (and even individuals) are using the services of consultants today. Many businesses choose to use consultants– benefiting from the value of an objective or "outside perspective." An effective consultant can play the role of "devil’s advocate" and allow a business to "attack itself" before a competitor (or changing market conditions) do the real "attacking." Isn’t it a good idea to attack your business weaknesses rather than waiting for the competition or a changing marketplace expose them for you?

There are many different types of consultants that can provide all sorts of services for almost any kind of industry or business type. The perspective of a trusted consultant can be invaluable to a company that needs help—whether it’s an issue as dramatic as a major change in positioning or something as simple as the fine-tuning of processes and the elimination of unnecessary paperwork.

Managers can get so emotionally caught up in day-to-day urgencies that long-term issues (which could be improved or streamlined) go ignored until those issues fester into a crisis. Business strategies that were previously successful may no longer provide the payoff today. But changing is difficult because "inside thinking" prevents management from considering new options. An effective consultant can challenge traditional thinking during the quest for improvement.

"Tradition" is generally recognized as being a good thing, but sometimes tradition can lead to useless activities that are costly to execute and some traditions provide little or no payoff. This simple story illustrates the point:

A young woman was preparing a ham dinner. After she cut off the end of the ham, she placed it in a pan for baking. Her friend asked her, "Why did you cut off the end of the ham"? And she replied, "I really don’t know but my mother always did, so I thought you were supposed to."

Later when talking to her mother she asked her why she cut off the end of the ham before baking it and her mother replied "I really don’t know, but that’s the way my mom always did it." A few weeks later while visiting her grandmother, the young woman asked, "Grandma, why is it that you cut off the end of a ham before you bake it?"

Her grandmother replied, "Well dear, it would never fit into my baking pan."

I think the most valuable service that I have provided in my consulting career is to help companies eliminate superfluous activities, thus freeing up time for more profitable activities. As Peter Drucker says "There is nothing so useless as doing efficiently that which should not be done at all." (No, this isn’t the "Mr. Drucker" from Petticoat Junction either.)

As a manager or business owner, you may realize that some things need to change, but you can’t quite put your finger on the specific changes that need to be made. Sometimes solutions to problems may have already been identified or even suggested, but for political reasons, the person(s) who have suggested the solutions may not be taken seriously. The messenger obfuscates a solid solution. Many managers never take the time to formally interview their employees for suggestions— and many employees have some very good ideas. This is just one sign that your company may need an outside perspective.

Here are some other reasons to seriously consider hiring a consultant:*

  • Lack of a written business plan
  • Unexplained low morale
  • Steady, consistent increases in costs
  • Regular cash shortages
  • Chronic delays or late delivery of products or services
  • Loss of market position
  • Overworked staff
  • Excessive rework without achieving objectives

  • Continual supply deficiencies
  • Lack of information about the competition or market

*James E. Svatko, "Working with Consultants," Small Business Reports (February 1989), p. 61.

A consultant, in a nutshell, is hired to tell you the things you really don’t want to hear (but you know you need to hear in order to make your business thrive). A good consultant provides solutions (and challenges his or her client to implementing them) in the quest to solve key issues and improve efficiency and profitability.

How do you know a consultant is credible and that he or she can help you?

Some consultants are certified, and there are a myriad of certifications available for different types of consultants. In fact, there are many different certifications available for the even the same type of consultants. At one time I was interested in getting "certified" but I had no idea which certification(s) were more valid than others (and researching it only led me to be more confused).

So being the shy person that I am, and wanting an answer from a credible source, I sent an e-mail to Dr. William A. Cohen, the author of a book I read a few years ago titled How to Make it Big as a Consultant and here’s what he said:

"I didn’t recommend a particular certification in the book because I don’t feel it’s necessary. People hire you or not because of what they believe you can do to help them."

Although I was disappointed in Dr. Cohen’s answer (because it would have made me feel more important to have those cool initials following my name on my business cards) I decided that "certification" wasn’t a big deal based on Dr. Cohen’s e-mail response. Plus I already had several letters of recommendation from clients that I have helped, so I was "certified" in the most important way possible.

Here’s the point: before hiring a consultant with whom you are not personally familiar, it would be wise to investigate his or her references and work style to ensure that you had a good "fit;" the effectiveness of the client-consultant relationship only flourishes if there is trust. I hate to use the use the now-bastardized word "partnership" but you get my point.

Watch for red flags

Be wary of any consultant that gives you the impression that he or she can wave a magic wand and solve all of your problems with one hand tied behind his or her back. This type of attitude should be a red flag that the consultant may be suggesting a canned solution.

Also watch for his or her use of cutesy acronyms or simplistic explanations, which tell you that the "one size fits all" solution may be suggested to save the consultant time.

One of the key consultant ethical codes is the acknowledgement that the consultant will only take on assignments in which he or she has the expertise and skills to perform. Make sure that you’re comfortable with the consultant’s background (reference letters!)– but more importantly, don’t be shy about interrogating him or her a little to test the consultant’s veracity and knowledge. Anyone can dress sharp and have a nice portfolio or resume’, but it’s the face-to-face question and answer session always exposes the truth. A candid and forthright conversation can identify substance and cut through the stylistic issues.

You should also request a written needs-based proposal from the consultant in advance of hiring him or her. If the consultant’s proposal does not clearly demonstrate that he or she understands your specific needs, then you may be considering the wrong person for the job.

Also, this proposal exercise should give you an idea of what to expect in the relationship for the future. If the consultant can’t adequately identify your needs via a needs-based proposal, then you can be sure that when the time comes him or her to provide action steps (in writing) following strategy meetings during the consulting contract, the consultant will be disappointing as well.

It’s the consultant’s job to keep you and your staff on track with the agreed upon actions that are collaboratively mapped out. If the consultant is unable to demonstrate that he or she has the focus, organizational and tracking skills during the initial discussions with you, that should be revealing. If the consultant cannot demonstrate that he or she accurately understands your challenges in writing, then it’s going to be difficult for the consultant to help you.

An outside perspective can prove to be invaluable if you receive objective advice from a good consultant. Objective advice is almost impossible to find within your own organization.

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